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Tanzania’s Economy Shows Resilience, Zanzibar Booms

Dar es Salaam - Tanzania’s economy has shown significant resilience, with the country’s external sector improving significantly in 2019.

According to data released by the National Bureau of Statistics and Bank of Tanzania, the current account deficit narrowed by 2.0 percent of GDP last year, from around 3.4 percent in 2018.

Factors Contributing to Improved External Sector

  • A slight depreciation of the Real Effective Exchange Rate (REER), leading to improved trade competitiveness with trading partners in gold, tourism, and manufactured goods.
  • Exports increased significantly, supporting the country’s ability to finance its external obligations.

Zanzibar’s Strong Economy

Zanzibar’s economy remained strong in 2018, driven by investment in infrastructure and growth in the tourism sector. The semi-autonomous region registered a strong growth of 7.1 percent in 2018, driven by:

  • Manufacturing
  • Wholesale and retail trade
  • Real estate
  • Information and communication
  • Fishing sub-activities

The economy is projected to grow at 7.8 percent in 2019, driven by ongoing public investments in health, education, and infrastructure.

Decline in Inflation Rates

Inflation rates also declined significantly in Zanzibar, with the average inflation rate falling to 2.7 percent in 2019 from 3.9 percent in 2018.

Regional Economic Outlook

Economic growth in the East African region remained strong and diverse, with the region projected to grow at 5.9 percent in 2019. The growth was driven by:

  • Increasing public investment in infrastructure, manufacturing, and services.
  • Improved food supply, decrease in oil, property, and rental prices.

Challenges Ahead

However, Tanzania’s economic growth prospects are threatened by expected decline in export demand due to trade tensions among major trading economies. The country’s performance is also dependent on regional and global developments, making it vulnerable to downside risks from the global economy.

Conclusion

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Tanzania’s economy has shown resilience, with significant improvements in its external sector and strong growth in Zanzibar. However, the country must remain vigilant against potential threats to its economic growth prospects, including trade tensions and global economic downturns.